The missing puzzle piece of the global economic recovery is finally falling into place

A black market foreign currency dealer displays the new $1 million banknote worth $7 on the streets of Harare October 6, 2008.
REUTERS/Philimon Bulawayo

Two positive pieces of economic news came out this week on either side of the Atlantic — pay growth picked up in the US and in the UK.

And those figures are a part of a bigger trend that's now clearly visible around the world — wages are coming back.

Since the 2008 financial crisis, wage growth has been very weak across the advanced world.

High unemployment has kept wages pressed down (you might not be so worried about a higher salary if you're concentrating on staying in work) and many of the jobs that have emerged since the crisis have been lower-paid than the ones they replaced.

That's one big reason that ordinary people have been so skeptical about the recovery. Other than having a job in the first place, rising pay is pretty much everyone's benchmark of how things are going for them financially. Seven years after the crisis, the long period of decline and stagnation for pay looks like it's finally in reverse.

We've looked at four economies: The United Kingdom, the United States, Germany, and Japan. These are four major advanced economies, all of which have seen recoveries (of different speeds and sorts) over the past few years — and make up nearly a third of the world's GDP.

Germany

Deutsche Bank
Germany's salary situation is one that's quite different from some of the other countries. There was no pre-crisis wage boom in Germany — in fact, wage growth has been contained below 4% in each year since the late 1990s.

That period of restraint may be coming to an end, and that would be a good thing.

German wage growth is hitting multi-decade highs at the moment, while unemployment is hitting record lows (the rate is now just 4.7%). Unions which previously helped to restrain wage growth are getting restive and demanding.

This is positive news for the rest of Europe too, even while most of the rest of the currency union isn't doing so well. That's because part of Europe's recovery requires rebalancing — for the struggling countries in Europe's south, that means exporting more and consuming less. It'll help if Germans are buying more of their stuff.

Japan

Barclays
Japan has been another source of persistent sluggishness on wages for years.

There are reasons to be hesitant here — Japan's deflationary experience, unlike that of Europe and the United States, isn't new. Employers are used to giving negligible pay hikes, and employees are used to getting them.

Japan's sales tax increase in 2014 also left inflation artificially high for a year, but that effect has now largely evaporated. Wage growth may have been pushed up in reaction to that spike, and may fall again now that it's disappeared.

On the other hand, Japan now has unemployment of just 3.3%. So like Germany, there should be some pressure on pay as employers compete to hang onto talent.

The United Kingdom

Credit Suisse
The UK has had some of the weakest pay growth in the advanced world since the crisis, with a pretty long drop in real wages (where inflation is taken into account).

But there are some signs that trend is turning around — average weekly earnings are now rising at their fastest pace since the crisis, and with inflation hovering around zero, that's even more positive in real terms.

British unemployment is still declining, and 73.4% of the working-age population is in employment (the highest rate on record).

The UK is still doing terribly on productivity, and a growing labour force with major flows of immigration that will likely keep average earnings down for some time. But the country seems like it's well past the weakest points for wage growth.

The United States

The US employer index for wages and salaries is rising by more than 4% for private industries for the first time since 2006, while the index for benefits is smashing through growth rates last seen over a decade ago.

Like the UK, that's all the more real to normal consumers, since inflation is so low across the advanced world.

The structure of work in the advanced world (particularly in the UK in Japan) is moving away from the full-time employer-employee model the countries are used to. There's more self-employment and fewer jobs for life. Some people have been shuffled into lower-paying jobs by the changing market, and they're not likely to be cheering yet.

But after years of almost everyone forecasting that it was right around the corner, it looks like for the furthest-recovered major economies, wage growth is really back.